Volkswagen Reportedly Plans To Cut Battery Production Costs By Investing In Mines

German automaker Volkswagen AG VWAGY reportedly intends to invest in mines to lower costs of battery production.

What Happened: Volkswagen intends to invest in mines to lower the cost of battery cells, meet half of its own demand and also sell to third-party customers, according to the board member in charge of technology, Thomas Schmall, reported Reuters.

See Also: Best Electric Vehicle Stocks

Volkswagen, the leading carmaker in Europe, wants its battery start-up PowerCo to become a global supplier, reported Reuters, citing Schmall.

But as raw materials are a major deterrent in battery cell manufacturing, the company needs to “invest in mines directly,” Schmall told Reuters.

Why It’s Important: Volkswagen is planning to invest about 180 billion euros — about $193 billion — between 2023 and 2027, the company announced earlier this week. About two-thirds of the investment has been allotted for electrification and digitalization.

With these investments, Volkswagen is aiming to close the gap with electric vehicle giant Tesla Inc.
TSLA and increase its share in the battery-powered car market, Reuters had reported last week.

Earlier this week, Volkswagen said its first overseas gigafactory for cell manufacturing will be established in St. Thomas, Ontario. After Salzgitter and Valencia, this will be the third group-owned plant worldwide and battery company PowerCo’s first cell factory in North America.

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

Read Next: Tesla’s Rumored Model 2 Sedan Could Catapult EV Maker’s Revenue To $400B By 2030, Analyst Predicts Ahead of Investor Day